AT&T's proposed T-Mobile acquisition: Going from monopoly to duopoly
The proposed acquisition of T-Mobile USA by AT&T (NYSE: T) divulges the true direction of telecommunication in the United States as it moves from the old monopoly of the former Bell System to a duopoly comprised mostly of the same family members. This is not a good trend for consumers.
In 1984 the old Bell monopoly was broken apart as the local Bell companies were divested from AT&T which retained long distance and manufacturing. Along the way, regulation was mostly eliminated in favor of the supposed competition that was to come from the restructuring.
In the ensuing decades, the local Bell companies consolidated until today there are just two (Verizon (NYSE: VZ) and AT&T) and a half (Qwest (NYSE: Q)). This AT&T is really Southwestern Bell which acquired the old AT&T and then cloaked itself by assuming the AT&T brand identity.
At the local level, AT&T and Verizon do not compete with each other. Competition at the local level is from the cable companies, although decades ago AT&T owned some of them and thus they too are distant members of the same family. At the local level, the provision of telephone, Internet, and television is today a duopoly.
Wireless was competitive but has drifted toward a duopoly. The proposed acquisition of T-Mobil by AT&T will mostly solidify the duopoly nature of wireless with AT&T and Verizon being the only providers on a national scale. But AT&T and Verizon are members of the same old Bell family.
Indeed, it seems that telecommunication in the United States is provided mostly by members of the old Bell family and some of their former close relatives (the cable companies). Somehow, regulators were duped.
There is a range of models on how to provide telecommunication, from monopoly to open competition, with duopoly in between. The old Bell System was a regulated monopoly - and mostly a benevolent one, with research at its Bell Labs forming the basis for much of today's digital era.
The simple fact is that the provision of telecommunication service is most likely a common carriage service best provided by a regulated monopoly. Instead we have a duopoly of the same old providers of the past running wild with little regulation or oversight. This is not in the best interest of consumers and clearly indicates the need for a return to the more stringent regulation of the past.
A. Michael Noll is a retired professor emeritus of communications at the Annenberg School for Communication at the University of Southern California. He was one of the few who predicted the Bell breakup years before it occurred, and he then studied its aftermath over the ensuing decades.